It is not uncommon for an individual or organization, such as a charity or community tennis club, to consult a financial advisor regarding investment returns that can be generated on some spare cash that is not needed in the immediate future.

As a result, the issue of investment “time horizon” is brought to the forefront as a key variable in making investment recommendations. This leads to a series of questions from the advisor such: (1) as the purpose of the funds, (2) the target rate of return desired, (3) when will the monies be needed and (4) under what circumstances would the investment be cashed out in an emergency.

Consider a typical scenario in which a client has sold a home and is not thinking of buying again for a year or so. They have a $250,000 to invest and want to know how they can make more money than what can be earned in GICs or other short term investments.